Market Update 04/11/13

One line- Markets mixed as investors weigh the possibility of further eurozone monetary easing against a less than dovish Fed statement.

- European stocks are up this morning extending a four week advance on reasonable corporate earnings, factory data and the possibility the ECB will increase stimulus when it meets this week. The euro fell to a six week low against the dollar. Asian shares outside Japan slid as investors moderate predictions of March tapering on a less than dovish tone from the Fed. Gold slid while the aussie dollar strengthened. Rates are unchanged. http://www.bloomberg.com/news/2013-11-03/australian-futures-climb-after-u-s-jump-yen-holds-drop.html

- US public investment has fallen to its lowest level since WWII as Republicans manage to curb Obama's spending on this issue. Compared with a post war average of 5%, public gross capital spending is now just 3.6% of GDP. The Republican effort has come a cost with their approval ratings at the lowest level since records began. http://www.ft.com/cms/s/0/f0e71a16-4487-11e3-a751-00144feabdc0.html#slide0

- The CBI Britain's largest business group is to begin a three year campaign to prevent the UK leaving the Eurozone if a referendum is held by David Cameron in 2017. The group will argue that membership of the Eurozone is worth £3000 to every household in the UK. http://www.ft.com/cms/s/0/94b18486-4318-11e3-8350-00144feabdc0.html?siteedition=uk#axzz2jfbJ2ffc

- Deutsche Bank who correctly predicted rising rates in the first half of the year believe Treasury yields will hit 2.25% by the end of the year as the US recovery is not as strong as many have hoped. The view contrasts from that of many market participants who believe data and asset prices will support the view that the Fed will taper soon and so expect to see an increase in yields by the year end.  http://www.bloomberg.com/news/2013-11-04/bull-market-lives-as-deutsche-bank-targets-2-25-treasury-yields.html

- Large US banks have had billions of dollars of losses reversed thanks to the recent rally in Treasuries. Data released by the Fed showed unrealized gains had recovered from negative territory to $8 billion dollars. http://www.ft.com/cms/s/0/50962b44-4313-11e3-8350-00144feabdc0.html#axzz2jbQVlQ3t

Data

S&P 1761.64 0.29%

FTSE 6762.37 0.41%
Nikkei 14,201.57 not trading

EUR/USD- 1.3498 0.08%
USD/JPY- 98.67 0.00%
GBP/USD- 1.5951 0.16%

Gold- 1315.07 0.08%
Oil (Brent)- 106.34 0.41%

Copper- 327.60 0.68%

 

 

10 year yields

US- 2.61 (-1bps)
UK- 2.65 (+1bps)
Japan- 0.59 (0bps)

St. Petersburg Paradox

http://en.wikipedia.org/wiki/St._Petersburg_paradox

Interesting

http://www.youtube.com/v/wmIObmv2t6M?autohide=1&version=3&showinfo=1&attribution_tag=G80_nWDfXaCCSv-C9duRtw&autoplay=1&autohide=1&feature=share

Market Update 01/11/13

One line- Weak eurozone data and a less dovish than hoped Fed causes a continuation of market sell offs.

- Fed minutes released on Wednesday were less dovish than was hoped although expectations are that tapering will not begin until the new year. On the news risky assets sold off  and the dollar strengthened. http://www.ft.com/cms/s/0/e9aefa0a-4187-11e3-9073-00144feabdc0.html#axzz2jNs26y1X

- Currency market movements are making headlines as weak economic data in the eurozone and a less dovish fed have caused the dollar and yen to strengthen while the euro sells off. Stock markets around the world have sold off with the S&P losing 0.4%, the Nikkei losing 0.9% and the FTSE is off 0.2% this morning. Gold sold off losing $18 to $1324 an ounce. Euro area CPI came in at 0.7% the lowest level in four years, according to a flash estimate, while 60 000 more people became unemployed in the region keeping the jobless rate at a record high of 12.2%. http://www.ft.com/cms/s/0/9f3b5a92-41da-11e3-b064-00144feabdc0.html#axzz2jNs26y1X

- In emerging markets China's PMI rose to an 18 month high, while India's stock market hit a record high yesterday following positive corporate earnings and a general increase in optimism. PMI readings today will be announced for the UK, the US and Mexico. http://www.bloomberg.com/news/2013-11-01/manufacturing-strengthens-from-china-to-south-korea-economy.html http://www.ft.com/cms/s/0/21266d22-42b1-11e3-9d3c-00144feabdc0.html#axzz2jNs26y1X

- Israel attacked two military targets yesterday the latest in a line of covert operations the country is carrying out. An official within the Obama administration said he believed Israel attacked because it did not want a transfer of weapons between Assad and Hezbollah which it believed had happened. http://www.ft.com/cms/s/0/3cdb8d12-4267-11e3-8350-00144feabdc0.html#axzz2jNs26y1X

- Squeezed margins in the global refining industry are hurting the worlds largest oil companies with Shell, Total and ExxonMobil all citing poor downstream business as a reason for their declining earnings. http://www.ft.com/cms/s/0/fb2d2414-41ff-11e3-bb85-00144feabdc0.html#axzz2jNs26y1X

Data

S&P 1756.54 0.38%

FTSE 6725.14 0.09%
Nikkei 14,201.57 0.88%

EUR/USD- 1.3525 0.43%
USD/JPY- 98.30 0.06%
GBP/USD- 1.6002 0.24%

Gold- 1321.26 0.10%
Oil (Brent)- 109.14 0.28%

Copper- 332.20 0.65%

 

 

10 year yields

US- 2.56 (+1bps)
UK- 2.61 (-1bps)
Japan- 0.58 (0bps)

Market Update 30/10/13

One line- Shares and bonds rally ahead of Fed meeting that is expected to give clues that recent events in the House have made tapering less likely in the near future.

- Global stocks are at near six year highs ahead of the result of the Fed meeting today. US equities and Treasuries rallied yesterday and the momentum continued through Asia and to Europe this morning. The S&P added 0.6% yesterday, the Nikkei 1.2% while the FTSE is up 0.6% this morning. While almost all investors do not see tapering on the cards, the market is looking for what is said in the Fed's accompanying statement. Gold is up and industrial commodities are firmer while currencies are little changed. http://www.ft.com/cms/s/0/ad7a3438-4113-11e3-8775-00144feabdc0.html?siteedition=uk#axzz2jCJlgISU

- German unemployment rose for the third month in a row in October with 2000 unemployed added to the 2.97 million. The jobless rate was unchanged at 6.9%. Forecasts for German growth in the 4th quarter expect a slowdown from 0.7% in the second quarter to 0.4% growth.  http://www.bloomberg.com/news/2013-10-30/german-unemployment-rises-for-third-month-as-economy-loses-pace.html

- Britain's financial watch dog the FCA will pledge a shake up of the opaque way asset managers in the UK pass on charges to their customers. This follows a report in which the organisation found inherent flaws in the system. http://www.ft.com/cms/s/0/59b33776-40ca-11e3-ae19-00144feabdc0.html#axzz2jCJlgISU

- European banks bill for misconduct grew yesterday as fresh revelations from UBS and Deutsche Bank came to light. The Libor scandal claimed a new scalp with Rabobank, the Netherlands biggest lender, being forced to pay a $1.1 billion fine and agreed to axe its CEO.  UBS has set aside $682 million to deal with legal costs while Deutsche bank has set aside 1.2 billion euros. http://www.ft.com/cms/s/0/5bb4cf48-40c6-11e3-ae19-00144feabdc0.html#axzz2jCJlgISU

- Blackrock's Larry Fink has urged Fed officials to begin tapering as he begins to see bubble like signs in the equity markets and the corporate debt markets. http://www.bloomberg.com/news/2013-10-29/blackrock-s-fink-says-there-are-bubble-like-markets-again-1-.html

Data

S&P 1771.95 0.56%

FTSE 6812.75 0.56%
Nikkei 14,502.35 1.23%

EUR/USD- 1.3760 0.11%
USD/JPY- 98.25 0.06%
GBP/USD- 1.6066 0.12%

Gold- 1348.99 0.29%
Oil (Brent)- 109.13 0.11%

Copper- 331.05 0.99%

 

 

10 year yields

US- 2.49 (-1bps)
UK- 2.56 (-4bps)
Japan- 0.58 (-2bps)

Market Update 29/10/13

One line- Markets mixed as Chinese money markets stabilized and traders look ahead to Fed meeting result tomorrow.

- Markets are mixed following the relief rally yesterday and ahead of the result of the Federal Reserve meeting tomorrow. The dollar index is up 0.2% while industrial commodities are down. The aussie dollar is down 0.6% as the RBA governor Glenn Stevens, voiced his concern at the currency's strength. In Japan a 0.1% drop in unemployment to 4% and a 3.1% gain for retail sales caused yen strength and the Nikkei to lose 0.5%. US stocks were basically flat for the day while European stocks are up this morning as BP raises its dividend. http://www.ft.com/cms/s/0/81bfdb84-4048-11e3-8882-00144feabdc0.html?siteedition=uk#axzz2j0eXHBC8

- China's money rates stabilized after the central bank resumed open market operations for the first time since October 15th. The bank injected $2.13 billion into the market via open market operations. The overnight repo rate fell 3bps to 4.52%. http://www.reuters.com/article/2013/10/29/us-markets-china-bonds-idUSBRE99S04G20131029

- The Reserve Bank of India raised its benchmark repo rate by 25 basis points to 7.75% as the CPI measure 9.84% and GDP growth of 4.4%. The move was in line with expectations and the rupee strengthened on the day. http://www.reuters.com/article/2013/10/29/us-india-economy-cbank-idUSBRE99S05V20131029

- As Iran attempts to fix its battered economy it is offering oil companies more profitable contracts in the region. The ongoing high level talks about the country's nuclear programme give hope that the US sanctions can be lifted. Iran is looking to attract $100bn in investment in the next 3 years. Iran has the world's largest gas reserves and fourth largest oil reserves. http://www.ft.com/cms/s/0/8c55893a-3fe5-11e3-8882-00144feabdc0.html#axzz2j0eXHBC8

- Deutsche Bank's profit fell 94% following a fall in income from debt trading and money put aside for legal costs. Net income in the three months through September fell to 41 million euros from 747 million in the year earlier period. The figure undershot analysts estimates by 400 million euros. The shares are down 3.3% this morning. http://www.bloomberg.com/news/2013-10-29/deutsche-bank-profit-falls-94-as-trading-revenue-slumps.html

Data

S&P 1762.11 0.13%

FTSE 6750.51 0.37%
Nikkei 14,325.98 0.49%

EUR/USD- 1.3757 0.20%
USD/JPY- 97.61 0.07%
GBP/USD- 1.6095 0.29%

Gold- 1345.98 0.49%
Oil (Brent)- 109.17 0.40%

Copper- 328.25 0.41%

 

 

10 year yields

US- 2.51 (-1bps)
UK- 2.59 (-1bps)
Japan- 0.60 (-1bps)

Market Update 28/10/13

One line- Risk on moves as concern over the Chinese banking system subsides.

- As concerns about the Chinese banking system wanes global equities closed in on 6 year highs. The Nikkei added 2.2% on a weaker yen and the Hang Seng added 0.5%. Industrial commodities are firmer with copper up 0.2% and brent trading up 0.8%. Treasuries sold off marginally and gold is flat. http://www.ft.com/cms/s/0/1cb2c432-3f7f-11e3-9657-00144feabdc0.html?siteedition=uk#axzz2j0eXHBC8

- RBI Governor Raghuram Rajan is expected to raise rates tomorrow for the second straight month as India's consumer inflation was 10% in a year ending last month. The rupee has strengthened 9% since Rajan took the reins but is still down 13% against the dollar for the year. http://www.bloomberg.com/news/2013-10-27/rajan-seen-raising-key-rate-again-to-tame-fastest-asia-inflation.html

- The outrage over the activities of the NSA continues as German paper Der Speigel alleges that Merkel's mobile phone activity has been monitored since 2002. Leaked documents were the source. What is not clear is the extent of the monitoring- whether conversations were monitored or whether it was only data about calls made that was collected. http://www.ft.com/cms/s/0/65044af4-3f15-11e3-b665-00144feabdc0.html#axzz2j0eXHBC8

- Optimism is growing in Europe that the recovery is gathering momentum. Housebuilding is picking up and car registrations have ended their decline. Anecdotal evidence in the tourism industry also indicates a change of fortunes for the area. While there are a growing number of optimists many managers are wary of being to positive about the recent growth. http://uk.reuters.com/article/2013/10/28/uk-europe-recovery-idUKBRE99R05220131028

- Britain's energy regulator is on course for a battle with the "Big Six" energy providers in Britain as consumer costs increased by double figure %'s but wholesale costs only increased 1.7%. Energy company bosses are to appear in front of the energy select committee on Tuesday as anger mounts over the price increases.  http://www.ft.com/cms/s/0/8c375508-3d67-11e3-b754-00144feab7de.html#axzz2j0eXHBC8

Data

S&P 1759.77 0.44%

FTSE 6725.38 0.06%
Nikkei 14,396.04 2.19%

EUR/USD- 1.3811 0.07%
USD/JPY- 97.62 0.21%
GBP/USD- 1.6205 0.25%

Gold- 1351.74 0.08%
Oil (Brent)- 107.64 0.66%

Copper- 328.25 0.41%

 

 

10 year yields

US- 2.51 (+1bps)
UK- 2.62 (+1bps)
Japan- 0.61 (0bps)